FM area has Special Assessments. But they are not very SPECIAL!

A Brief Description: A special assessment is a charge for the cost of infrastructure and public improvements such as streets, sewers, curbs, gutters, sidewalks, bridges, and waterlines. The costs are assessed to properties that will benefit from an improvement project.

So in some ways these misunderstood and barely disclosed surprise assessments aren't special....they are horrible.

New homes are built on lots which have all new infrastructure.... those costs are in addition to, on top of, the price of the house. In the FM area lots are usually assessed about $300 per running front footage of the adjacent street. It varies based on the bids, interest rates, and FRONTAGE width of the lot - not the SIDE length on corners. Corner lots are NOT usually hit for extra.

Other areas of the country often require the developers to pay the cost in advance and recover it by raising the cost of the lot. This is a better way to disclose the price of a house. But if developers were not able to afford to put in streets and sewers then there would be LESS development, FEWER homes, and a resulting higher demand. Homes would become even more expensive!!! (And that would be really, really, horrible...!!)

The List Price of a house in FM area does not include the cost of the Special Assessments. This is a BIG surprise if you are not aware of it. It is in the listing details, however, so read to find what is quoted. However since the amount may not be available until after a year there may be a '1' in the space to indicate there WILL be future assessments when the estimate or numbers are available. A rough method of Guestimating what the cost will be is to figure about $200 a month on top of the property tax*.


The NUTS and BOLTS Description of Special Assessments: The fee consists of principal and interest and is usually paid over 20 years. The interest rate paid by the property owner coincides with the interest rate and the maturity date for the bonds which are sold to finance the project.

The process starts when the City conducts a public hearing regarding the advisability of a proposed improvement project. A public hearing process addresses the issues of estimated cost, method of assessing costs, the apportionment of costs between the city-at-large and the benefit district, and the boundary of the "improvement district".

If the petition is approved or the governing body acts on the advisability of an improvement project, the benefit district is established by the Commission through a resolution. The City then enters into a contract for construction and borrows money to finance the project construction costs.

Once the project is complete and all project costs are known, a special assessment amount is calculated to find each property owner´s share of the specials. The City first calculates the total actual cost. The total cost is then apportioned to each lot in the benefit district based on the method included in the petition or resolution from the public hearing. The most typical method assigning street costs based on the width of the lot which the street is running past.... another is to bill an equal share per lot. For example, the total project cost is $100,000, and there are 100 lots. Each lot´s share will be $1,000.



Alternate Solutions:
If a property owner wants to pay off the special assessments in the price of the house purchase it can be paid with MORTGAGE Interest, which is tax deductable and spread out over 30 years. The payment of the special assessment is not tax deductable. Check with your accountant since I am not an accountant. Would you rather spread the payments over a 30 year amortization which has deductible interest or a 20 year spread which has no deductible interest? On a 20,000 assessment it would reduce the payment about $23 per month. The monthly interest on a 6% loan would be $100 at the beginning. If there was a tax deduction at 15% or 28% that could be another $15 to $28 to save.

If you meet with us we'll talk more about how best to deal with "special assessments".

*Property TAXES:
In the Fargo and West Fargo locations property taxes are roughly about 2% of the property value per year. So a $200,000 house might be taxed at $4000 per year (or $333 per month). The last I checked with my accountant, property taxes were also deductable, but you should ask your accountant.

Dan and Lida Deutsch, CRS, Buyers Agents

How many of your renter friends will give up $8000 and the dream of owning a home?

If renters don't buy a home this year then when?.....when?..... people who succeed at remaining renters this year will be feel they cannot afford a home next year and for many years thereafter as interest rates and home costs rise far out of reach.

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Homes For Sale in Fargo Moorhead Metro area and Cass and Clay County

We hope you'll enter your own specified criteria in a comment: then return to http://www.fargoMLS.com often and use the search tools we have set up here especially for you.


Dan and Lida Deutsch, CRS, Buyers Agents